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I've never seen it explained quite as neatly as the way Jess Telford explains it so I'll just direct you there... :)

• Summary of his talk: weblog.200ok.com.au/2015/06/web-directions-code-2015-big-stonking.html#jesstelford
• Slides: docs.google.com/presentation/d/12EGzyhwChunsddCN7…
• Tutorial: github.com/jesstelford/scope-chains-closures